USD Graphic Rewind: Dollar Index Set to Test 2010 Lows Below 76.00
The dollar index got beaten down again Tuesday as the euro and global equities raced higher. The euro was well supported by PMI manufacturing and German unemployment data which pointed to a rosier picture appearing in the euro-region. As well as news that the EFSF may be permitted to buy newly issued government bonds. On the equities side, US bourses were off to the races after a solid round of earnings ahead of the open, supported by a strong ISM reading too. With the Dow rallying and closing above the 12,000 mark, risk appetite climbed and investors shunned the dollar in favour of riskier and higher yielding assets.
The index now looks all but set to test 2010 lows below 76.00 (75.62) as the recent intense downtrend looks set to continue after posting a triple-top through the end of 2010 and early 2011. The dollar index failed to break above these range highs and has been in something of a free-fall since then. Only after a re-test of theses lows can we see the potential for a reversal as current trend begin to get stretched into over-sold levels.
Written by Jonathan Granby, DailyFX Research Team
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